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I guess it wouldn't follow your narrative to point out that a few months ago the price was around $1200/BTC.

That preceded the public face of the Mt. Gox situation, which is what the original comment refers to.

There are always small speculative bubbles here and there, it happened exactly like that 6, and 12 months prior. It's interesting how bitcoin prices are highly cyclical. I think there's going to be ONE MORE expansion, in approximately 3 months, that takes the price of btc to about 5k, although it may pop as high as 10k on its way. If for no other reason than there are often self-fulfilling prophecies in finance.

Cash requires complete trust and people still use it.

Lost trust does not mean the price has to fall. As I said, there is close to zero trust in the bitcoin economy, so a loss of the little trust isn't a big surprise. Most savy investors/bitcoin users won't have lost much money in this affair either, because they didn't trust MtGox more than some common criminal...